Imagine a recruitment firm that reached £25m in net fee income (NFI) ten years ago and is still at roughly £25m today. It has loyal clients, a recognised name and a founder who earns very well from it. Is that a business that has stopped growing because it cannot get any bigger, or because the next stage no longer feels worth the cost?
That is the question behind the £25m plateau. For a founder, another phase of growth could mean handing over decisions, building a broader leadership team and putting more of today’s profits back into the company. Staying where they are may be a deliberate, entirely rational choice. It may also be a sign that the business has reached the limits of the model that brought it this far.
So while the two explanations look remarkably similar in the headline numbers, they can leave a founder with very different options when it is time to step back or sell.
A plateau is an observation. A ceiling is a conclusion.
I often hear the £15m–£30m NFI range discussed as though it were a well-established holding pattern for independent recruitment firms. While it may describe businesses many of us know, it’s not a claim we can responsibly make about the sector as a whole without closely following a defined group of firms over time.
That would mean comparing ten to twenty years of like-for-like NFI, accounting for acquisitions and changes in reporting, calculating compound annual growth rates and testing the result against inflation. Published accounts do not always disclose NFI consistently. We would also need to know when a founder remained in charge before drawing conclusions about tenure and growth.
Why does this distinction matter? A firm can spend several years at £25m because its market is temporarily weak, because it has deliberately traded volume for margin, or because its operating model cannot support the next stage. Those are very different stories.
The first question for any individual firm is therefore what happened inside the headline figure. Did permanent fees fall while contract income rose? Did the firm exit low-margin accounts and improve profit? Did one division grow while another shrank? A single NFI number can conceal progress as easily as it can conceal drift. Looking at a full cycle, rather than comparing two convenient year ends, would tell us far more about whether growth has genuinely stalled.
The recent market has hardly provided a clean test. BDO’s 2026 recruitment M&A review estimates that the UK recruitment industry contracted by 3% in value in 2025, to £25bn. A difficult year should not be mistaken for a structural ceiling. Equally, a difficult year does not explain a decade of broadly unchanged NFI.
Standing still costs more than it used to.
There is one part of the question we can quantify. According to the ONS all-items CPI index, the annual average rose from 100.0 in 2015 to 138.4 in 2025. On that measure, a business generating £25m of NFI in 2015 would have needed about £34.6m in 2025 merely to match its earlier figure in general purchasing-power terms. If it still generated £25m, that would be equivalent to about £18.1m in 2015 money: a real-terms fall of roughly 28%.
That’s an illustration, not a claim that NFI should track consumer prices exactly. Recruitment firms have their own mix of salaries, commissions, fees and investment costs. But it does challenge an easy assumption that nominal stability does not necessarily mean the business has held its ground.
Put another way, maintaining the 2015 figure’s purchasing power would have required NFI growth of around 3.3% a year, compounded, over those ten years. That is a more demanding test than asking whether this year’s figure looks similar to last year’s. It is also only a starting point, owners should look at real profit and cash generation, as well as NFI, before deciding what the business has gained or lost.
The calculation tells us even less about why a particular firm stopped growing. It cannot establish that the founder became comfortable. For that, we would need to examine leadership decisions, reinvestment, succession and the opportunities the firm chose to pursue or decline.
A comfortable income can coexist with a costly choice.
The founder who has built a £25m NFI business has achieved something substantial. There is no rule that says they must turn it into a £50m business. More scale might require a different management team, new systems, less personal control and years of reinvestment. A founder may understand that bargain and decide it is not for them.
The difficulty comes when the choice has never quite been made. The founder enjoys the income of a mature business while assuming that an eventual buyer will pay for the growth potential of an emerging one. Meanwhile, decisions about leadership depth, client concentration, succession and new services can be deferred because the current model still works.
There is an uncomfortable feedback loop here. When the founder remains the person who opens the most important doors, protects the largest accounts and settles the hardest decisions, keeping control can feel commercially prudent. It may even be the right call in the short term. But it also leaves the next generation of leaders with fewer chances to prove they can carry those relationships and decisions themselves. The longer that continues, the harder it is to know whether the business has reached a ceiling or has simply never been given the structure to find out.
Founder tenure alone would not answer that question. A long-serving founder might be the reason a firm has endured and adapted; another might be the bottleneck. Correlating years in charge with growth would be interesting, but without examining delegation, investment and market conditions it would tell us little about cause.
None of those decisions proves a lack of ambition. Taken together, they may determine what the company can become without its founder.
Buyers buy what the business can do next.
RSM’s Q2 2026 recruitment M&A analysis describes a selective market. It reports that 80% of private-equity transactions in that quarter were add-on acquisitions, up from 70% in 2025. Its discussion of the wider workforce solutions and consulting market points to specialist capabilities, premium margins, recurring client relationships, senior-level talent solutions and technology-enabled delivery as qualities attracting attention.
That does not give us a formula for valuing an individual firm. A flat NFI line does not automatically make a business unattractive, and rapid top-line growth does not automatically make it valuable. A specialist firm with dependable earnings, enduring client relationships and a leadership team capable of operating without the founder may have built considerable strategic value during a period of modest growth.
But if the NFI has been flat and the founder still holds the key clients, makes the critical decisions and supplies much of the firm’s identity, a buyer has to ask what they are acquiring beyond today’s earnings. The plateau then becomes less interesting than the dependency beneath it.
That question can be tested well before a sale process. What proportion of fees comes from relationships owned by people other than the founder? Can senior leaders retain and grow accounts without an introduction from them? Is the firm’s performance intelligible by practice, client and fee type, or does it depend on one person’s explanation of the numbers? These are practical ways to examine whether the company’s earning power belongs to the organisation or remains concentrated in its founder. They do not promise a particular valuation, but they make the options clearer.
Perhaps that is the real test of the £25m ceiling. If the founder stepped back, would the business keep winning, developing leaders and finding room to grow? Or has £25m become the point at which the founder’s income is secure while the company’s options quietly narrow?
There is nothing wrong with choosing a highly profitable business that stays roughly the same size. The consequential choice is whether to recognise it for what it is, and what it might mean for the next chapter.
